Deutsche Telekom sets up 500 million euro venture capital fund

FRANKFURT (Reuters) - Deutsche Telekom is to set up a 500 million euro ($620.4 million) fund for technology ventures, giving the company more scope to invest in venture capital and innovation.

The fund, called Deutsche Telekom Capital Partners (DTCP), will be launched early next year and will focus on Germany’s growing tech start-up scene, the telecoms operator said on Tuesday.

The new fund will also expand its activities to include private equity investments in existing companies.

“DTCP combines the expertise and strength of a large corporation with the agility and flexibility of a small investment company,” Deutsche Telekom’s Chief Executive Tim Hoettges said in a statement.

Technology investment is dominated by U.S. venture capital firms, while the European venture capital scene has remained much smaller. Last year, European companies attracted $7.4 billion in venture capital investments out of total of $48.5 billion, of which the U.S. companies took $33.1 billion, data from consultancy firm Ernst & Young showed.

In the United States alone, venture capital companies poured $13.0 billion into 1,114 financing deals in the second quarter of 2014, according to Thomson Reuters data. This compared to $1.75 billion for 266 deals in Europe, which fell to $1.47 billion in the third quarter.

Deutsche Telekom’s existing venture capital fund T-Venture, established in 1998, will be closed to new investments but will continue to manage its portfolio of about 100 companies.